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Thursday, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
 Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by China’s National Development and Reform Commission to formally and indefinitely block Australian coal imports is a key threat to Australia’s political and economic wellbeing. Australia can never expect to win a trade war with its biggest export partner, and it is sheer political and economic suicide to try to do so. But is it devastating for the Australian coal export industry? Not at all.
Far more strategically threatening in the long term for Australia and our coal industry is the pledge by China’s president Xi Jinping to reach net zero emissions by 2060, which was rapidly followed by net zero emissions by 2050 pledges from Japan’s prime minister Yoshihide Suga and South Korea’s president Moon Jae-in. This series of sudden and powerful pledges of increased climate ambition by world leaders is likely to be terminal for our coal exports if we look out a couple of decades.
Australia is caught in the geopolitical quandary of having China as our key trade partner and the United States as our key military ally. When US president Donald Trump started a trade war with China, it was never going to turn out well for Australia. And incoming president Joe Biden is unlikely to change tack too materially where China and trade and technology are concerned (whereas on climate, Biden’s arrival changes everything). But we in Australia are like a mouse caught in the middle of two sparring elephants.
In business, the best rule is that the customer is always right (even if they are not). Our coal exporters will however survive this near-term political fight, probably far better than our wine or lobster export industries, by comparison.
There are no coal ships destined for China being loaded in Australia now. For most industries, that would be devastating. For coal, not so much. In fact, a look at the share prices of Whitehaven Coal and New Hope Corporation would suggest quite the opposite. Since the September 2020 trough, and acknowledging the sharp price falls on Tuesday, Whitehaven shares have rallied 70% and New Hope are up almost 20%.
Why? Coal is coal, at least to a finance analyst like me, if not an engineer. Australia sells the vast majority of its coal to Japan, South Korea and Taiwan. And if China buys more Russian, South African and Indonesian coal to replace Australian coal, then we can, by and large, simply swap customers, maybe with a month’s disruption. Total demand doesn’t change, nor does supply – at least not in the near term. Sure, there are some boiler and blending constraints, but notwithstanding coal luddite claims that Australia’s coal is slightly less carbon polluting than someone else’s seaborne coal, the minute difference is irrelevant – all coal is almost 100% more carbon intensive than wind, solar, hydro, nuclear or energy efficiency. Or green ammonia, as Japan’s JERA is now thinking.
The coal industry is actually benefiting from a near-term relief rally. In September Australian coal exporters were losing money with every tonne of coal they exported. In December, the picture is very different. China’s key Shanxi province has just shut down coal production near term due to a spate of deadly accidents, just as winter heating demand has kicked in. Meanwhile the Chinese industrial economy is powering along. So the Chinese domestic thermal coal price has jumped 35% to 740/t yuan in the last three months. Seaborne thermal coal prices have rallied from a low of US$46/t to over US$70/t in the same timeframe. Even as total volume of Australian coal exports have dropped in the December quarter, the value has surged, and more importantly, the profitability much more so (notwithstanding the 10% rally in the Aus$/US$, lifted by the unprecedented rally in iron ore prices). Hence the Whitehaven Coal and New Hope increase in share price.
The coal export sector outlook seems profitable again – in the near term. But the 25% collapse in the Dalrymple Bay Coal Terminal share price since its initial public offering last week is a clearer perspective of the longterm structural headwinds Australia’s coal industry is facing. Far better for our Hunter Valley, La Trobe Valley and Bowen Basin communities that we as a nation acknowledge the science of climate change, prepare a national roadmap, ideally with a destination and time of arrival clearly acknowledged.
The investment, employment and export opportunities for Australia are enormous, and exciting. To steal a very good line from Ross Garnaut and Mike Cannon-Brookes – better we focus on building Australia as a renewable energy superpower.
This commentary first appeared in The Guardian.
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Sunday, 13 December 20
LONGSTANDING DOWNSIDE RISKS TO TRADE OUTLOOK - BALTIC EXCHANGE
The OECD has attempted to put a positive spin on the trade message emanating from its latest economic outlook, released last week.
The ...
Sunday, 13 December 20
INDONESIA COAL OUTPUT AT 514 MILLION TONNES THIS YEAR, 2021 TARGET UNCHANGED - REUTERS
Indonesia coal output in the period to Dec. 10 stood at 514.2 million tonnes, official data from the energy ministry’s website showed.
&n ...
Thursday, 10 December 20
MALAYSIA'S CIMB ANNOUNCES COAL FINANCING PHASE-OUT BY 2040 AS ASIA'S FOSSIL FUEL DIVESTMENT DRIVE ACCELERATES - IEEFA
The first emerging markets bank to announce a progressive coal exit policy
Malaysia’s CIMB Group Holdings (CIMB) has announced ...
Wednesday, 09 December 20
MARKET INSIGHT - INTERMODAL
Heading towards the end of a difficult year and with the entire planet under the shadow of the covid-19 virus, it is interesting to proceed with a ...
Tuesday, 08 December 20
MARKET ANALYSIS - ALLIED SHIPPING
It is now undisputed that oil consumption for 2020 will post a considerable drop, as demand for several petroleum products has plummeted since the ...
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- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- PTC India Limited - India
- Lanco Infratech Ltd - India
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